Soho House & Co (SHCO) 9 Aug 242024 Q2 Earnings call transcript

Hello, everyone, and welcome to the Soho House & Co Inc.

Second Quarter 2024 Results Conference Call. Please note that this call is being recorded. [Operator Instructions]

I'd now like to hand over to Thomas Allen, Soho House & Co Inc., Chief Financial Officer.

begin. now may You

with that joining quarter forward-looking to is financial forward-looking the I'm involve about to statements our and beliefs for and CEO. & Thomas Soho differ actual Co's statements. results uncertainties that materially Today's future statements I'm here Officer. or All Financial the events. second results. Chief Carnie, discussion us you represent our contains discuss today the from House forward-looking Allen, Andrew risks Thank My expectations could name cause

By Some at section. are we of to access views filings. sohohouseco.com Events statements such to our found the factors earnings now, QX and can that and our change. be forward-looking our no assume may in Any you which described cause differences any should only represent News today, if update SEC have in of the release, obligation as our statements forward-looking views

posted the have we our also which Events can site. our and Additionally, on News found presentation, in QX be section

During financial our should the measures. to addition for These certain results. a or GAAP from from comparable the available are GAAP earnings measures today's press non-GAAP an to release. substitute Reconciliations measures considered in isolation be refer most non-GAAP we in call, not and as also

Now Andrew. let to me hand it over

QX to demand revenues the against and the quarter-on-quarter and as priorities going Q&A. and on financial over our balance growing versus Thanks, versus Membership we've our hand and profitability. Membership on to made EBITDA progress X% the before continues deliver membership update our has continue another performance, been Thomas, strategic highlights we you to quarter. be I'll give hello, guidance moving an everyone. quarter then update year on to strong. talk strong year-on-year last and XX% revenues excellence and update greater very against and period enhancing growth increased to I'm of on provide same drive sheet through strategic to last an to the operational in with quarter's priorities. Thomas our membership, the

grow, XXX,XXX, X,XXX list Our globally. to to growing Soho global XXX,XXX continues the we wait and members quarter House welcomed finishing members at

the Nashville, since and ramp-up the still Kong City, houses Paulo, House first Soho driven in phase. XXXX Dumbo, of Hong house White quarter. such by in growth opened growth Rome our strong that was in and and Austin, other openings Sao opening South in House We strong Downtown have have as are houses now and City such saw Soho XX America member new Portland. We Mexico L.A., as this

a As we over think Milan, Houses coming year-over-year $XX new and demand. QX about the adjusted Madrid, Tokyo to at Soho the houses, open in future, excluding noting It's footfall worth planned our and we million. plans $X that to includes further with improving Barcelona XX%. Total investments strengthen grown Bodrum also impact to X% sequential Paulo membership helping announced X% losses quarter, per EBITDA year-on-year growth, by saw improvement million. $XXX quarter. revenues year visit, greater had million and to have grew up $X in-house a this revenues would driven EBITDA Sao the that closer spend with Portland, throughout We in trends in-house grew years, initial in million our new year-on-year in better the which the to and

up guidance are while total are today in and on reiterating gives seeing financial and We new which raise our the us revenue the pleased with we total houses, membership and adjusted on confidence ramp revenue our really markets EBITDA. guidance membership to membership demand

and houses, and improved more including choices houses, have We all our pop-ups scores Our seen only across introduced experience X goal experiences. is dining a with in we to reflected new quarter. began night members great our satisfaction our service member provide this new which menus, in

We in combined service check events, us. We of resulted XX% when attending eat and service, our personalized the spend event member increased members with enhanced on increase with further per continued almost member the on recognition speed of member variety out and and which of the app recommendations events rolling increasing more the in training, attended. an focus members quality events and year-on-year

we Soho anywhere House Soho a to members delivered ] provide London. Finally, unique find House and We first experiences can't Festival continue Festival [ Backstage with they the [indiscernible] in else. our

and for which improved grown excellence, our profits we've flow. have beverages We continue choice margins new same of to quality and leads at to the time. members drinks our Through cash focus on deal, operational great the global and

more transform These achieve further reflect openings streamlined over us and XX% plans to have basis increasing costs, up We member our new our impact our a having in we few improving efficiencies, and of the help contribution continue new house to level office environment year-on-year, margins greater growth on our operating and the to next house current initiatives back-of-house service despite approximately XXX couple years. corporate strategic for systems lowering houses margins. our contributed short-term level points with to

over Thomas the guidance. our you me pass give and let to to numbers Now on more detail

contribution $XX margins short-term initial $X while from revenues revenue lower quarter year-on-year Scorpios the almost and X% and $X were or year-on-year, million Andrew. Year-on-year in-house trends saw level revenues the revenues. In-house million and of across our million. driven up giving by revenues. improvement down year-on-year, XX% year-on-year lower. revenues $XX of were were increase to a the $X we House flat XXX from openings. Other million the regions, house recurring with revenue or level quarter the mid-single-digit Bodrum, and Total impact basis were the consistent fees points timing an $XXX geographic increase design for to than the impact Europe/rest grew The townhouse and due drove pricing revenues growth and up first approximately decline revenues house for X% relatively was up million We stand-alone million, despite new in more down of year-on-year, Membership up major development membership XX% rose was Americas, were XX% XX% while U.K. more on Thanks, sales, QX. Like-for-like to million in-house $XXX restaurant world. other were membership was contribution year-on-year details to revenues revenue. year-on-year the X%. $X million, and in up other Membership in

Higher at first when year. last Our we in Soho of half and quarter, was the adjusted Sao Soho Portland Scorpios first $XX.X only year-over-year. end EBITDA House million opening the the in opened Soho up second quarter million, and $X Paulo year compared offset House revenues of the by to Bodrum was Bangkok the quarter second House membership

our As we drive growth confident $X the new know curves, in from maturation year-over-year all our quarter, a these you million. will approximately impact But on are long-term had of EBITDA openings profitability.

first balance the Now million We the end quarter, $XX again of in flow the million higher debt. operating equivalents, quarter and our our from last discussing up cash of year. quarter XX% ended with and fifth a from sheet. cash positive the net We than in million $XXX and $XXX cash quarter activities approximately of had row

positive. operating openings, related CapEx in activities incurred still our sequentially net investing flow all our to and quarter higher we cash from were the While

continue prior year, in with to line million of expect the $XX in to CapEx our We million to guidance. $XXX spend

the We from $XX of quarter down of had February, end at Xx the XXXX. at adjusted quarter announced second the approved net repurchase share ended and the in a Xx We authorization. million to Board EBITDA debt new

dissolution May, in of million of the special late stock the shares repurchasing the in bought quarter. Following committee and began we back $X

to of million. over business our delivery raising strong cost after to metrics, from million and of revenue to and Finally, $XXX XXX,XXX $XXX million X/X increasing are we good membership membership to year-end membership million guidance range particularly $XXX $XXX our

guidance revenue EBITDA. With and other hand me to total metrics, key We financial adjusted that, Andrew. for are let back reiterating

forward this the support been In as their set solid continued holding passion their our X. our the that, will closing, on plan like opportunities profitability bringing to to we plans Investor on members December to and now year. long-term and also excitement and you we ahead. work we've up with thank mention for against questions. to With loyalty. around York deliver sharing the and I our we teams want New for I about our globally that it's would in to business hard life open and for growth We Day goals look significant a ourselves an quarter

first please. take question, the we can Operator,

you a your As can reminder, questions phone or either over the over the ask submit webcast. them

first question comes Steven Our Instructions] [Operator from Citi. from Zaccone

by I house then focus to region where you about improvement, the the restaurant better little progressing some trend. And weakness. callouts than any are bit seen things has backdrop the a could wanted broader overall talk revenue on

data macro So you some feel your given the do just competitive how positioning, points? about of

you Steve, we're first foremost, as know, club. membership and

of strength houses. in the and consistently our shows members our really So membership, to see we're pleased are demand our our using it

it these, more results. importantly, trends nice as of in per we But lot our have that are delivering to improved I And in spend improved to prepared quarter. quarter. a which I we think the was said member I saw So see last my in remarks mentioned, that footfall the sequentially really initiatives improve

rest across Regarding our U.K. Europe, relatively major of and been world including any regional all geographies and variance. The America. America, Latin similar have across trends

across seeing in real when different, QX. not we're we from we're any board reported improvement So an seeing the

XXXX? increase count a in should guidance, question about we with on about count then of Okay. planning go-forward terms the for in good think follow-up think how for rate Is basis growth? this run a us And Great. preliminary my is just the Thomas, membership to membership

Thanks, Steven.

it's to XXXX. I for So early give think guidance

to lot then host an going long-term As said, we'll Day we a in and about talk December, we're our Investor plans.

you wait that. So don't if mind, until

from Blair. William Sharon Zackfia comes from Question

of that about year? are terms new those trying And figure out this coming openings, 'XX. I'm cited just any for there house you for openings? what a are think we announced should in more in guess handful I health to of planned you've any new

anticipate open Sharon, of beginning the X. X at the so to we year, we to said

big already houses we've houses, X in So great Portland, San opened Paulo.

up very Mews going concept, tenured our members. Next in Soho longer house, a Mews it's much at be aimed is beautiful is unique which which London, our a House and first is to

So for we're that about year. this very excited

opening next Milan Manchester Madrid, we for the and And have in upcoming then openings future, We Tokyo. announced And Barcelona with year. recently early have year. following then we that, next

house. So regarding this were end on Mews we of the opening very year, focused

lapping year you in-house impact? we're kind last third strike about we of should And think impacted now several as of back areas. the which think I the lapping that Okay. quarter, go on about the we're here the year, how Hollywood of in as half your kind we business I revenues then talk think in Can into

a there's of in still work, the lot folks going Yes, gone Hollywood entertainment I now. right there's it's of a that lot and that's say of a back to X be impact industry question. transition at wouldn't a the good are in well. as There's

I and an quarter, I'd much in say through it's But wouldn't in I over. that say we would what all improvement we're across member our saw spend completely pretty So that the and on QX. confident that continuing reiterate houses

comes Our Shaun America. from question of next Bank Kelley of

Thomas, Obviously, way domestic you on little talking just about any give U.S. cross-border can to theme. what have kind of and unique seeing it a pattern way relates their of are are hotel wanted you kind a some A of What plan, a a Andrew, there? ask bit lot that. or you're about been companies wise big lens curious so just and you track into insight on of seeing as to travel travel, it's domestic outbound

question. Shaun. Good

Europe, as up We you year, have We've with occupancy that good slightly the and actually. broadly ADRs season in see in we are our last occupancy cross-border that's line had saw -- travel. of a most in region

a last So we a fantastic Paris, had because weeks in of have had season. X Olympics. We've good

to most for So across cross-border our that see part, with the we've house world have the we into good traveling the bedrooms. continued members really

been of Andrew, Hong kind been you the I have then top that prepared Downtown houses beginning Kong, I ramp. we remarks, have well, And think, the the in L.A., those you but Austin, Nashville, some or think mentioned Great. of that the and in are noticed past, funnel not I of doing would expect names mentioned in also

but to several broadening bit in of mean both you openings, either given in starting unique of a gateway see I on is Asia. you be the and Hong markets, L.A. curious obviously, are of a little particular, of have X a Kong idiosyncratic So some those houses in out? those with may kind timing

with They've growth a seen Hong We That's a question, year. and terrific the Shaun. pleased from great in fantastic team more we've got there be job there throughout couldn't the done of terrific in beginning We've the Kong. a Kong, Hong new year.

turnaround in complete bounced big with, delivering well and city pleased what obviously, most we're as wanted comeback back. in all their down Hong things in that the Kong. of one So footfall a member it's to the And really cities

seen And members. ramp-up about L.A. then really we've service with food good a in We we're really real good got programming in good feel Downtown and We've now downtown that Downtown. LA, the the our in delivering

So year. that's this house of another that really we're proud

Last and about of kind about and/or just to going trying just contemplated houses. Obviously, us first year. new Thomas, $X openings, Great. to any I be, was Can there just for of think question the years you incremental either like from drag those half? me a just relative million but the all to isolated drag last mentioned, you quarter would remind it's modeling at should from least out And undoubtedly kind that this think, forward. the how we the guidance, think

Yes.

last if you year. versus about Shaun, year opened we this So what think

only Bangkok year the year, in of City the first year, X highlighted, of to last year. Sao the of second this these we of House So in open And the the Mews opened we've the up Bodrum we're opened Andrew in likely Paulo going half And sites we've half then half Portland, opened in year. and then the year. that Mexico first half we second as the said, Soho in

that we've really call year, $X the we -- almost million -- this quarter about impact. so the seen on And was second that a really was talked

given which the of quarter, flipped openings of too. bit last bit drag tailwind saw of the a of a a First year, then impact And second a we year. half actually

Our next of Kelly from comes George Capital. question Roth

open, apologize, opening your into remarks. But how it how and while point, then location do still I seen about it on part you at you I you Bodrum, year? And and if for how can do after plans Bodrum Rome new missed that your First is to Scorpios the of prepared a the that's since talk to expect perform some the performing for and little you've weakness? this been later compared expect given it's as location

George, good question.

has off strong us gone season. to Scorpios making -- another Firstly,

I think our of it's going to one best. be

the So Bodrum the beautiful It's was recently. Scorpios is first brand. property. that we're Mykonos will confident same delivered. future and opened success bungalow, has will our we're We've June. strength be accommodation shows build, Mykonos. I And next first a It got and there of in private the Scorpios year, confident it story. it as just like -- Scorpios the the will levels another we'll system -- in which get

construction. it's With Tulum, still under

As reported, there was a hurricane in that region.

component, construction. So it the have the in And we're property, and when developers that accommodation had also to performance to pause excited see we'll opens.

Okay.

Okay. location year? probably that open? it will next Is And

likely. Most

surveys guess then cover about topic I those you're And and speak know kind Okay. questions. satisfaction. of X just so to checking I regularly things. is second, wanted member -- you on I

in maybe then this The first year you hearing and one attrition kind quarters? complaining recent is, of what that still changes of, members more or are secondly, you are seen any wanting have to about

remarks, I on those think part great to very, on. when And second focused they're friendly of our So survey, measures have experiences. houses. continue members want ask these success we our members on I and atmosphere on prerecorded experiences question? which service, service and our for And we scores that we in us that's What their be more that. our my fantastic we're are to measure, unique service, to things houses want was improve What of member them. very your where surveys, food, seen in weakest we on recognition members the we've focus questions. obviously are Then experiences continue quoted our what Why do

Whether changes retention? not to member seen any you've or

consistent. it's No,

not we're changes. seeing So any

Q&A call, disconnect. joining end session. our you safe, today's of the wonderful and for have hope We everyone, now we you, Thank you day. have Stay a reached and may